AMD Secures Landmark AI Chip Deal with OpenAI, Challenging Nvidia's Dominance
AMD has announced a multi-year deal to supply artificial intelligence chips to OpenAI, a move poised to generate tens of billions in revenue and disrupt Nvidia's market dominance. The agreement gives the ChatGPT creator the option to acquire up to a 10% stake in AMD. This transformative partnership highlights the immense demand for computing power in the AI industry and provides OpenAI with a crucial hardware supply line as it aims to develop advanced artificial intelligence.
Unpacked:
This AMD-OpenAI agreement is unique because it ties hardware purchases directly to equity rewards, aligning OpenAI’s growth with AMD’s valuation. Unlike traditional supply deals, it uses a performance-based share vesting structure, making it one of the most innovative customer-supplier partnerships in the semiconductor sector’s history.
AMD will supply its Instinct MI450 GPUs, based on the CDNA4 architecture, starting in the second half of 2026. Later, OpenAI may also receive MI500 systems, as the partnership’s large-scale commitments are expected to anchor AMD’s next architectural generation.
This deal positions AMD to challenge Nvidia's dominance in AI hardware by securing a major customer and guaranteeing large-scale GPU deployments. The partnership’s scale and integration strategy, including pre-engineered datacenter blocks, directly target Nvidia's primary market strengths.
If OpenAI deploys the full six gigawatts of AMD GPUs and exercises all share warrants, the hardware value could reach $90 billion, and OpenAI could acquire up to 160 million AMD shares. Both companies would see significant revenue and market valuation increases if milestones are met.